Wednesday, August 31, 2011

Social Security as a Ponzi Scheme

Texas governor Rick Perry made waves recently when he described the Social Security System as a Ponzi scheme.  The Social Security Administration has provided a useful comparison to illustrate the differences between the two things.  They take the comparison far too literally: A Ponzi scheme needs the number of investors to keep growing, whereas Social Security needs the number of investors to never fall.  So yes, they are not exactly the same thing.  The bottom line, however, is that they are both unsustainable financial scams in their very design.